CHARAK PHARMACEUTICALS INDIA LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) Since a short question of law is involved and there is not much controversy on facts, with the consent of counsel for the parties, we proceed to decide the petition finally at this stage itself.

(2.) By this petition under Article 226 of the Constitution of India, the petitioner questions the legality and validity of:(i) a letter dated 9th March, 1999 issued by the Assistant Commissioner (T), Central Excise, Delhi - respondent No. 3 herein, returning he declaration dated 21st January 1999, pertaining to the additional excise duty demand (Rs. 19,29,642.00 ) for the period from 1st September, 1995 to 31st January, 1998, filed by the petitioner under the provisions of the Kar Vivad Samadhan Scheme, 1998 (for short `the KVSS') on the ground that no show cause notice had been issued to the petitioner for the amount ntioned in the declaration and (ii) a demand cum show cause notice dated 16th March, 1999 issued by the Superintendent, Central Excise Range Panipat for recovery of the said duty amount of Rs. 19,29,642.00 . The petitioner seeks a direction to the Commissioner Central Excise - the designated authority under the KVSS, to consider the said declaration and restrain the Superintendent from proceeding further in the matter of recovery.

(3.) The petitioner, an incorporated company, is engaged in the manufacture of P.P. Ayurvedic Medicines falling under Chapter Heading No. 3003.30 of the Central Excise Tariff Act, 1985. They were clearing the physicians samples of the said Ayurvedic medicines on payment of duty at the assessable value equivalent to the cost price. The Central Excise Department disputed the basis adopted by the petitioner for determining the assessable value equivalent to the cost of production. Accordingly, vide letter dated 26th July, 1995 the Superintendent, Central Excise, Panipat - respondent No. 5 herein, directed the petitioner to clear the samples by adopting a higher assessable value on pro-rata basis of the assessable value of the regular trade packs sold commercially, with a further direction to execute B-13 bonds for provisional assessments to be made in respect of future clearances. Immediately thereafter, on 28th July, 1995, a show cause notice was issued to the petitioner by the Assistant Commissioner Central Excise, Division Sonepat - respondent No. 4 herein, demanding duty difference for the period from January, 1995 to April, 1995, calculated on the aforenoted basis. Subsequently, on 25th October, 1995, yet another show cause notice, on the same ground, was issued by the said respondent for the subsequent period from May, 1995 to August, 1995, raising an additional demand. The petitioner filed replies to the show cause notices. Contesting the stand of the department that the assessable value of the physicians samples had to be determined n accordance with Rule 6(b)(i) of the Valuation Rules, it was pleaded that the samples were not liable to any excise duty as these were neither marketed nor marketable; the samples were nothing but advertisement material; cost of samples formed a component of the sale value of the medicines sold and this component of sale value bore excise duty as the other component and, therefore, charging of excise duty on the samples would amount to double taxation, which is not permitted under Article 265 of the Constitution.